Home building in doldrums

The ACT's fall from grace is second only to Alice Springs, at minus 43 per cent, and the Pilbara, at minus 36 per cent, as the delayed effect of the global financial crisis hits home, BIS's Regional Building 2013-2015 report says.

On the positive side, the start of work on a $130 million office building for the ACT government in 2014-15 will give the building industry a badly needed boost.

Until this year, the long lead time on big apartment block developments, some of which had been on the drawing board since 2005 or earlier, kept Canberra swimming strongly against a national wave of doom and gloom.

BIS Shrapnel's Kim Hawtrey said Canberra's high levels of residential building between 2007 and last year had been driven by projects set in train before the GFC hit. These projects are nearing completion, the apartment market is oversupplied and very few new big apartment blocks are in the pipeline.

Dr Hawtrey, who said the downturn also reflected concerns about a possible downsizing of the public service in the event of a change of government, said that Canberra's recent building boom had been weighted heavily in favour of multi-residential developments.

''[ACT] building starts have been running at almost twice the usual rate,'' he said. ''They peaked in 2010-11 with housing starts at three times the normal rate.

''What we are now seeing is a correction from the surprisingly strong building figures following the global financial crisis.'' Unlike other cities and towns in regional Australia where free-standing homes drive the property markets, Canberra has had developments of 200-plus units in recent years. ''Some have been on a very large scale by Canberra standards,'' Dr Hawtrey said.

''These would most likely represent decision-making prior to the GFC. It takes about six to nine months to build a detached house.

''The lead time on a large apartment block can be two to three years, or more when planning consent, the design process, finance and all the other factors are considered,'' he said.

A reluctance by public sector workers to make big financial decisions when their jobs could be on the line cannot be ruled out as a contributing factor, he said.

Housing starts for the ACT peaked at a historic high of 5105 in 2010-11 before slipping by 14 per cent to a still-strong 4442 starts in 2011-12.

''We are expecting to see total dwelling commencements steadily fall back towards a more historical normal level of 2150 by 2014-15,'' Dr Hawtrey said.

Canberra residential building starts: